Professional Documents
Culture Documents
CCCL Corp Presentation Final
CCCL Corp Presentation Final
2
China Ceramics - Overview
Company Overview
Robust Growth
Founded as Jinjiang Hengda Ceramics FYE Dec 31
in 1993 140 122.0 USD in mns
116.7
120 107.6
Five different types of ceramics tiles used 100 90.4
for exterior siding 80
60
Over 2,000 color and size combinations
40 24.1 25.9 * 24.2
18.6
Current capacity of 42.2 mm sq. meters in 20
Jinjiang Hengda and recently acquired 0
Hengdali facility 2008 2009 9 Months 09 9 Months 10
*We have 16.5M shares outstanding and approximately 2.8 million warrants outstanding with exercise price of $7.5 and expiration set for
November 16, 2012. 4
China Ceramics - Overview
Corporate History
Total urban population reached 622 million in 2009 as compared to 450 million in 2001
Tier I cities are expected to account for only 10% of China’s commercial real estate activities
by 2020, which highlights the significant development opportunities in Tier II and Tier III
cities, according to Jones Lang LaSalle
% of Population Urbanized
Urbanization Trend in China
by Country
650 million 48%
45.7%
43.9% 44.9% 46%
600 43.0%
44%
Indonesia Malaysia Russia
41.8%
40.5% 42%
550
37.7%
39.1% 40% 50.3% 69.4% 72.9%
36.1% 38%
500
36%
450 34%
US UK
32%
400 30% 81.4% 89.9%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Urban Population Urbanization Rate
8.0 400
4.0
0
Source: CMMC 9
Key Market Trends
Product trend – Such new products as “Green”, lighter, heat insulating and noise-
reduction outdoor ceramic tiles will be introduced
Importance of distributors
• Currently, China’s outdoor ceramic tile industry relies heavily on distributors with roughly
73% of total sales made through distribution
• As the competition intensified, more manufactures will bid for large construction projects
in an attempt to sell products to real estate developers directly
Narrowing of quality gap between the best PRC manufacturers and international
Chinaplayers
Ceramics with continuous improvement in production
- Overview 10
Competitive Landscape
More than 200 manufacturers are located in Jinjiang, with a combined annual
production volume of 70% of China’s total production volume
Others are mainly located in Foshan, Zibo, Linyi, Dehua and Jiajiang, specializing
in manufacturing interior wall and floor ceramic tiles
Jiajiang
Dehua
Jinjiang
Foshan
Own 4 utility model patents and have exclusive right to use 11 design patents
Focus on environmentally friendly products like ultra thin, light weight tiles
Developed the energy recycling system for re-using excess heat and energy in
production to save up to 20% of cost
13
Production Process
14
Established and Loyal Customer Base
China Ceramics
Over 10 years’ cooperation with top 10 clients, who represented 43% of sales in
2009
Sales in Tier II and III cities account for over 90% of sales
Discuss
Meet/Introduction design and Sign After-sales
Delivery
to customers product contracts service
specifications
Our sales people correspond with 40 exclusive distributors in different regions and do
the direct sales
Good communication between our sales force and distributors to avoid sales
overlapping
Distributors make monthly reports on customer requirements
Provide installation instructions and collect after-sales feedback by our sales force
Clay and coal are 2 major raw materials, accounting for 47% of COGS
Over 10 years’ cooperation with key suppliers to ensure on-time supply and stable
price
18
Sustainable Gross Margins
Customized product - Nearly all production is built to order for specific projects.
Continuously focused on R&D to meet customers’ demands
High quality product - ISO certified and use international manufacturing equipment.
Sell to customers who demand high quality (including a large Japanese construction
company)
Brand - Our “HD” and “Hengda” brands received the “Chinese Well-Known Mark”
award and “Asia’s 500 Most Influential Brands 2010” award from the World Brand
Laboratory
Scale - One of the largest producers of exterior ceramic tiles in China and we are able
to complete large orders for our customers. Our size enables us to enjoy certain
economies of scale savings vs. our competitors
Energy efficiency - Hengda and Hengdali production lines recover and/or reuse waste
water, waste dust, exhaust and kiln after-heat. In 2008, this decreased our energy
costs by 20% in our Hengda factory
We are able to sell our products at a 15-20% premium vs. our competitors
19
Capacity Expansion
Hengda facility
Update 4 production lines by 2010 and the other 5 by 2011
Increase total capacity by 15% and 14% yoy to 32.2M and 36.8M sq. meters by
2011 and 2012 respectively
Hengdali facility
Complete 2nd Phase by 2010
Add-in additional 14M sq. meters annual capacity
Complete 3rd Phase by 2011
Add-in additional 18M sq. meters annual capacity
21
Robust Revenue Growth
FYE: Dec 31
(USD In millions)
140
$122.2
120 $116.7
$105.9
100
$90.0
$81.1
80
60
40
20
0
2007 2008 2009 9 Months 09 9 Months 10
The average historical rates for translation of Renminbi into U.S. dollars were RMB 6.8409, RMB 6.9623, and RMB
7.6172 to US$1.00 for the years ended December 31, 2009, 2008 and 2007, respectively. They were RMB6.8164
to USD$1.00 for the nine months ended September 30, 2010. 22
Strong Financial Margins
FYE: Dec 31
(USD In millions)
30%
28% 28% 29% 31%
40
35 24% 22%
21% 21%
30 21%
25
20 37.0 36.3
26.2
15 23.7 24.2
26.5
10 23.1 29.3
19.1 18.6
5
0
FY2007 FY2008 FY2009 9 Months 09 9 Months 10
Gross Profit Net Profit Gross Margin Net Margin
Planned reduction in OEM outsourcing and increased capacity should improve margins
The average historical rates for translation of Renminbi into U.S. dollars were RMB 6.8409, RMB 6.9623, and RMB 7.6172 to US$1.00 for the
years ended December 31, 2009, 2008 and 2007, respectively. They were RMB6.8164 to USD$1.00 for the nine months ended September 30,
2010.
FY 2009 excludes $3.6 million in one-time transaction costs associated with going public in the U.S. 23
Balance Sheet
As of Dec 31 As of Sep 30
(USD In millions)
2008 2009 2010
Inventory Turnover 98 77 66
24
Management Earn-out Targets
The maximum shares will be released if we achieve the net income target
If the stock price reaches $20 for 20 trading days within a 30 day period prior to
April 30, 2012, 2 million shares will be issued; if the stock price trades at or above
$25, an additional 1 million shares will be issued
Management achieved the net income target in 2009 and received 1,214,127
shares
Weifeng
Su Lawyer at Fujian Minrong Law Firm from 2005 to 2007
General legal
Counsel & Graduated from the School of Law of Xiamen University
Secretary 26
Board of Directors
Founder, President and CEO of Knox & Co. and Peers & Co., both international
Paul K. Kelly financial advisory firms focused on Asia
Non-Executive Chairman and CEO of the Westgate Group, Inc., a strategic advisory firm
Chairman focusing upon cross-border business opportunities for clients, with an emphasis
on China and Asia